Analyzes the organization and own area to identify key relationships that should be initiated or improved to further the attainment of own area’s goals.

Competition today means getting to the finish line first with better products and services. What is good enough today most likely won’t be good enough tomorrow. Even if you’re meeting your objectives, don’t get complacent.

You could probably find small ways to improve your team’s operating procedures, but chances are your work area isn’t responsible for the total process. Whether you are producing a product, rendering a service, completing a project, or implementing an improvement idea, people outside your work area are going to be involved in what’s going on. Partnerships force you to consider how your work area and organization fit into the larger business process. They broaden your outlook and help you see how to make a major leap forward.

An organization is like a link in a value chain that connects the seller of raw materials or ideas to the end-user of finished products and services. An organization receives products or services from suppliers, adds its unique value, and then provides enhanced products or services to its customers. The customers add their unique value and supply even more enhanced products and services to customers one step closer to the end-user.

Consider a simple example. Suppose your organization, Sandy’s Sausage, processes sausage and other cured meats for grocery stores and pizzerias. One value chain might begin with the farm that grows grain (George’s Grains), which is sold to the livestock ranch that raises pigs (Paul’s Pigs). The pigs are sold to a meat-packing plant (Mo’s Meats), which sells the pork to your organization for processing into sausage. You sell sausage to a chain of pizzerias (Pat’s Pizza), which prepares the final product for consumption by end-users, the pizza eaters. There are many other customers and suppliers in the chain: tractors to run the grain farm, trucking from suppliers to customers, spices for the sausage, other ingredients for the pizza, and so forth. Every link in the chain adds value and offers opportunities to improve efficiency through partnerships.

Within an organization, work units are arranged in similar customer-supplier chains, with one unit serving as an internal customer to another. For example, the accounting department of Sandy’s Sausage might supply financial data to its customer, the human resources department, which uses the data to provide staffing services to its customer, the meat processing department.

Chains of customers and suppliers compete with one another to provide greater value to the end-user. This value is measured by such factors as lower cost, higher quality, or faster time to market. If Sandy’s Sausage and Pat’s Pizza partner to create a more tasty and cheaper sausage pizza, they can gain a larger share of the pizza eaters market, which will benefit both organizations.

Oftentimes, traditional organizations treat customers as distinct and separate entities that they must convince to make a purchase. Organizations that form partnerships with their customers take a different approach. By collaborating with their customers, these organizations remove the guesswork about what customers want. Because they help their customers become more productive, they increase sales, build more durable relationships with customers, and lock out competitor suppliers.

Supplier Partnerships

Organizations need suppliers for materials, parts, services, or information. Because these purchases add significantly to overall costs, it is to the organization’s advantage to obtain the highest value at the lowest price. Without partnering, organizations have to negotiate a better deal. To do this, some organizations use pressure tactics, haggle, or play one supplier against another. With partnering, organizations have suppliers who understand and respond to their needs. Organizations that help shape the nature of what their suppliers provide are inherently more satisfied with what they get.

Internal Partnerships

In traditional organizations different areas or units have their own agendas that often compete or conflict with those of other units. For example, the marketing department might want to develop many products to meet customer needs, but manufacturing might prefer few variations to enable long production runs. Meanwhile, engineering might want to tinker with new technologies to stay up-to-date. Each group tries to maximize its own goals without considering the overall organizational goals. When work units form internal partnerships, they establish relationships that move everyone toward common objectives. As partners, they share ideas, resources, information, and know-how.

To determine which partnerships you should initiate or improve, take the following steps.

1. Identify improvement opportunities.
Organizational units don’t exist in a vacuum, and you undoubtedly already have many potential partners. Your first challenge is to examine how these relationships function and then determine if building strong partnerships with these groups will be mutually advantageous. Ask yourself:

Do my external customers:

Share their strategies and how my organization/area can help to achieve them?

Share information on problems, profits, costs, and similar factors?

Consult my organization/area about the timing and nature of products or services they want?

Share expertise and knowledge with members of my organization/area?

Regularly contribute innovative product/service ideas?

Share concerns about our products/services immediately?

Do my external suppliers:

Consult my organization/area when developing strategies and plans for functions such as production and billing?

Emphasize factors in their measurement and reward systems that are consistent with what my organization/area wants (quality, low price)?

Share information on problems, profits, costs, and similar factors?

Deliver products and services in a way that meets my terms rather than pushing for their own schedule, pricing, etc.?

Share expertise and knowledge with members of my organization/area?

Regularly contribute innovative product/service ideas?

Address my needs and complaints quickly?

Do my internal customers and suppliers:

Integrate their processes with my area’s?

Shift resources to my area quickly and willingly when I need them?

Readily form cross-functional teams to explore new ideas or enhance organizational integration?

Coordinate their actions with my area’s?

Treat people in my area as friends and collaborators, not enemies and competitors?

Share resources, information, and ideas rather than protect their turf?

Consult me in the early stages when their decisions and actions affect my area?

If you answered “no” to any of the above questions, you have an opportunity to improve. A partnership will help you take advantage of that opportunity.

2. Challenge boundaries.
Rigid boundaries around organizations and work areas can blind managers to the possibility of integrating their work processes with those of internal or external customers and suppliers. An important step in building partnerships is to challenge those boundaries.

But, challenging boundaries does not mean destroying them. Not even the strongest proponents of “boundary less organizations” seriously suggest tearing down all boundaries. Rather, managers should try to make the boundaries more flexible and allow greater movement between them.

Boundaries are an intrinsic part of organizational life and serve useful purposes. Your organization does different work than your customers and suppliers. Your area performs distinct functions for your organization that no other area performs. Boundaries keep tasks differentiated and roles clear.

However, rigid and unyielding boundaries create problems. Inside an organization, functional units—like marketing, human resources, sales, and research and development—are often called silos or chimneys because they appear as hierarchical stacks on traditional organization charts. Each silo has its own agenda, resources, and leadership structure––a condition that fosters an “us” versus “them” attitude. Such feelings discourage integration across the organization and impede goal achievement.

It is especially difficult to think of lowering the boundaries of your own organization to make way for external partnerships. After all, the organization is legally defined as a separate entity. But if you rethink the ways your organization works with a potential external partner, you can open up pathways of productivity that are now blocked by the boundaries between you.

Challenging boundaries means changing your mind so that you can change your behavior. To shift mental gears, identify the purpose of the value chain and how the goals of your organization fit into that chain. Then think about how much easier it will be to meet the organization’s goals if you work with, not against, other members of the chain.

3. Identify potential partners.
Your work area might deal with a large number of internal and external groups. Some of these groups will be good candidates for partnerships. Spend time analyzing your current relationships and select those with the greatest potential for immediate payoffs.

Begin by making a list of your most important internal and external customers and suppliers. Identify what you need from them and what they need from you. Next, think about your relationship with these groups. Are you more open with some groups than with others? Finally, when a group seems compatible, identify how building a business partnership could better meet everyone’s needs.

Don’t just explore current relationships; extend your search for external partners. Ask experts, make visits, attend trade shows and conferences, and explore the literature about potential partners. Find organizations whose strengths will complement your own and look for trustworthy companies whose values are similar to yours.

Identifying potential partners is only one stepping stone in a longer path. Don’t commit to a partnership before exploring all of its positive and negative possibilities.